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Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect are securities trading and clearing links programmes to be developed by Hong Kong Exchanges and Clearing Limited (HKEx), Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Corporation Limited (ChinaClear), aiming to achieve a breakthrough in mutual market access between the Mainland and Hong Kong.
Except the ChiNext stocks limited to institutional professional investors during the initial launch of Shenzhen Connect, all Hong Kong and overseas investors will be allowed to trade SSE Securities and SZSE Securities through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock connect, only Mainland institutional investors and those individual investors who satisfy the eligibility criteria (i.e. Individual investors who hold an aggregate balance of not less than RMB500,000 in their securities and cash accounts) will be accepted to trade SEHK Securities through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.
Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will be open to all SEHK Participants (EPs), SSE Members, SZSE Members, HKSCC's Clearing Participants (CPs), and ChinaClear Participants, subject to their meeting certain information technology capability, risk management and other requirements as may be specified by the relevant exchange and / or clearing house. The names of all eligible EPs and CPs will be published on HKEx website.
Under Shanghai Connect, SSE Securities that are eligible for trading by Hong Kong and overseas investors include all the constituent stocks of the SSE 180 Index and the SSE 380 Index, and all the SSE-listed A shares that are not included as constituent stocks of the relevant indices but which have corresponding H shares listed on SEHK, except the following:
a. SSE-listed shares which are not traded in RMB; and*Means the relevant shares are placed under "risk alert" by SSE including shares of "ST companies", "^ST companies" and shares subject to the delisting process under the SSE Rules. For details, please refer to the SSE Listing Rules.
Under Shenzhen Connect, SZSE Securities that are eligible for trading by Hong Kong and overseas investors include all the constituent stocks of the SZSE Component Index and the SZSE Small / Mid Cap Innovation Index which have a market capitalisation of not less than RMB6 billion and all the SZSE-listed A shares which have corresponding H shares listed on SEHK, except the following:
a. SZSE-listed shares which are not traded in RMB; and
b. SZSE-listed shares which are under risk alert+
+Under risk alert in relation to A shares listed on the SZSE Main Board or SZSE SME Board, means the relevant shares are placed under "risk alert" by SZSE including shares of "ST companies", "^ST companies"; and in relation to any A shares listed on the SZSE Market, means the relevant shares are subject to the delisting process or the listing of which has been suspended by SZSE under the SZSE Rules. For details, please refer to the SZSE Listing Rules.
At the initial stage of Shenzhen Connect, investors eligible to trade shares that are listed on the ChiNext Board of SZSE under Northbound trading will be limited to institutional professional investors. Subject to resolution of related regulatory issues, other investors may subsequently be allowed to trade such shares.
Northbound Trading | HK Share Trading | |
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Eligible Stocks | Shanghai-Hong Kong Stock Connect All the constituent stocks of the SSE 180 Index and the SSE 380 Index and all the SSE-listed A shares that are not included as constituent stocks of the relevant indices but which have corresponding H shares listed on SEHK, except SSE-listed shares which are not traded in RMB and SSE-listed shares which are under risk alert. Shenzhen-Hong Kong Stock Connect All the constituent stocks of the SZSE Component Index and the SZSE Small / Mid Cap Innovation Index which have a market capitalisation of not less than RMB6 billion, and all the SZSE-listed A shares which have corresponding H shares listed on SEHK, except SZSE-listed shares which are not traded in RMB and SZSE-listed shares which are under risk alert. At the initial stage of Shenzhen Connect, investors eligible to trade shares that are listed on the ChiNext Board of SZSE under Northbound trading will be limited to institutional professional investors. Subject to resolution of related regulatory issues, other investors may subsequently be allowed to trade such shares. |
All Hong Kong-listed securities |
Quota | Daily Quota: RMB52 billion for each market | No quota |
Trading and Settlement Currency | RMB | Most of them are HKD |
Stock Code | 6 digits | 5 digits |
Order Quantity and Odd Lot | The lot sizes of all stocks are 100 shares. Buy order must be in board lot size, while odd lot is only available in sell order. Board lot buy / sell order and odd lot sell order are both matched on the same platform on SSE and SZSE and subject to the same share price. Thus, the matched quantity of a board lot buy / sell order can eventually include odd lot. The maximum order size is 1 million shares. |
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Order Price | There is a general price limit of ±10% (and ±5% for stocks under special treatment (ie ST and ^ST stocks) in the risk alert board) based on previous closing price. The tick size is uniformly set at RMB0.01. A dynamic price checking has put in place for buy orders. Buy orders with input prices lower than the current best bid (or last traded price in the absence of current best bid, or previous closing price in the absence of both current best bid and last traded price) beyond a prescribed percentage will be rejected by CSC. |
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Order Type | Only Limit Order will be accepted. Limit Order can be matched at the specified or better price. |
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Amend Order | Order amendment is not allowed. Customer can cancel the order and submit a new order. | Allow |
Day (Turnaround) Trade | Day Trading is not allowed. Shares bought in the Trade Day (T) can only be sold in the Next Trade Day (T+1) or later. | Allow |
Settlement Cycle | Stock will be settled in the Trade Day (T), while money will be settled in the Next Trade Day (T+1). | Stock and money are settled in two business days after the trade (T+2). |
Main Fees and Lavies |
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Investors will only be allowed to sell but restricted from buying such SSE Securities if:
Investors will only be allowed to sell but restricted from buying such SZSE Securities if:
Hong Kong and overseas investors may receive securities which are not already accepted as SSE Securities / SZSE Securities as a result of any distribution of rights (including the right to subscribe for rights issues or open offers) or entitlements, conversion, takeover, other corporate actions or special circumstances:
The full list of SSE Securities / SZSE Securities will be published on the HKEX website, which will be updated from time to time.
According to Several Provisions on the Interconnection Mechanism for Mainland and Hong Kong Stock Markets「內地與香港股票市場交易互聯互通機制若干規定」(the CSRC Stock Connect Rules), trading and settlement activities under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect would be subject to the regulations and rules of the market where such trading and settlement activities take place, while the listed companies would be subject to the regulatory requirements and the rules of the place where such companies are listed.
Further, under the CSRC Stock Connect Rules, the China Securities Regulatory Commission (CSRC) shall supervise and administer the business relevant to Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. Through regulatory cooperation arrangements, CSRC, together with the Securities and Futures Commission of Hong Kong (SFC) and the securities regulatory authorities of other relevant countries or regions, shall protect investors' legitimate interests in cross-border investments based on the principles of fairness, justice and reciprocity. Through cross-border regulatory cooperation mechanisms, CSRC, SFC and the securities regulatory authorities of other relevant countries or regions shall investigate into and take enforcement action(s) against illegal cross-border activities in relation to Shanghai-Hong Kong Stock Connect and / or Shenzhen-Hong Kong Stock Connect (as the case may be) in accordance with the law.
The Investor Compensation Fund established under the Securities and Futures Ordinance in Hong Kong does not cover any northbound trading under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.
Shanghai Connect and Shenzhen Connect do not support initial public offerings.
The Northbound trading arrangement under severe weather conditions is as follows:
After 15 minutes and until the close of SSE's market or SZSE's market, only order cancellation is allowed
For Shanghai Connect, HKSCC and ChinaClear have established Clearing Links whereby the 2 clearing houses have become a participant of each other, and have agreed to undertake the settlement obligations in respect of Northbound and Southbound trades executed through the relevant SEHK Subsidiary and the SSE Subsidiary respectively.
All trades executed on SSE, including the Northbound trades executed by EPs through the SEHK Subsidiary in Shanghai, are settled in ChinaClear. Being a participant of ChinaClear, HKSCC settles the Northbound trades with ChinaClear Shanghai on behalf of its CPs. HKSCC on the other hand settles such trades with its CPs in Hong Kong. A similar settlement arrangement has been adopted by ChinaClear for Southbound trades initiated by Mainland investors under Shanghai Connect.
For Shenzhen Connect, HKSCC will settle the Northbound trades executed on SZSE with ChinaClear Shenzhen on behalf of its CPs. HKSCC on the other hand will settle such trades with its CPs in Hong Kong. HKSCC will extend its participantship with ChinaClear to undertake the settlement obligations in respect of Northbound trades executed under Shenzhen Connect. A similar settlement arrangement will be adopted by ChinaClear for Southbound trades initiated by Mainland investors under Shenzhen Connect.
As HKSCC stands in between CPs and ChinaClear and clears and settles Northbound trades of CPs with ChinaClear under Shanghai Connect, relevant risk management measures have been incorporated into the CCASS Rules to align CP's obligations with the operation and requirements of the Shanghai market. New risk management measures will also be adopted for Shenzhen Connect as HKSCC will also stand in between CPs and ChinaClear and will clear and settle Northbound trades of CPs with ChinaClear under Shenzhen Connect.
There are also measures in place to insulate risk spillover across markets: clearing participants of one market should be shielded against the default risk of clearing participants of the other market. This can be achieved by having each CCP to undertake the settlement obligations of their respective clearing participants with respect to their cross-boundary trades. Also, both CCPs do not participate in each other's mutualised risk management pools (e.g. default funds) that are contributed by their home market clearing participants.
The chances of ChinaClear default are considered to be remote. Nonetheless, the following arrangements have been considered for reason of prudence:
Northbound trades in Connect Securities — If ChinaClear defaults as the host CCP in the Mainland, HKSCC will in good faith, seek recovery of the outstanding stocks and monies from ChinaClear through available legal channels and through ChinaClear's liquidation process. HKSCC will in turn distribute the stocks or monies recovered to CPs on a pro-rata basis.
Cash dividend, bonus issue and voting are the most common types of corporate actions relating to Connect Securities. Take-over offers, rights issues, open offer and business mergers may also occur but they are relatively uncommon. The following paragraphs provide a general description about each of these corporate actions.
HKSCC will endeavour to collect and distribute cash dividends relating to Connect Securities to CCASS Participants in a timely manner. Each CCASS Participants cash dividend entitlement will be determined by reference to its holding of the relevant Connect Security on the record date according to HKSCC's record, taking into account any overdue CNS long and short positions in the relevant Connect Security.
HKSCC will inform CCASS Participants of all general meeting details such as meeting date, time and the number of proposed resolutions. CCASS Participants who have relevant holdings in their stock accounts (for themselves or as agents for the underlying investors) as at the record date may provide HKSCC with instructions on how to cast their votes via CCASS's existing voting functions.
HKSCC will inform CCASS Participants of details of take-over offer such as the offer rate and the subscription period, including the relevant time-limit. Normally, the offer period is around 30 days. Based on the instructions of CCASS Participants, HKSCC will submit 1 consolidated acceptance instruction to the relevant SSE- or SZSE-listed company via the designated electronic platform or other means as agreed with SSE or SZSE.
Upon receipt of the cash or securities consideration, HKSCC will to the extent practicable arrange to distribute it to the relevant CCASS Participants on the same day.
HKSCC will inform CCASS Participants of details of rights issues / open offers such as the subscription price and the subscription period, including the relevant time-limit. Normally, the subscription period is around 1 week, but it may be as short as 1 business day only. Rights issue / open offer entitlements of each CCASS Participant will be determined by reference to its holding of the relevant Connect Security on the record date according to HKSCC's record, taking into account any overdue CNS long and short positions in the Connect Security. Rights / open offer are non-tradable. Based on the instructions of CCASS Participants, HKSCC will submit 1 consolidated subscription instruction to the relevant SSE- or SZSE-listed company via the designated electronic platform. Upon receipt of the rights / open offer shares, HKSCC will to the extent practicable arrange to distribute them to the relevant CCASS Participants on the same day.
Shanghai Connect and Shenzhen Connect do not support initial public offerings. Hong Kong and overseas investors should note and comply with the arrangement and deadline specified by their respective brokers or custodians (i.e. CCASS Participants) in order to participate in the corporate actions relating to their SSE / SZSE Securities.
As HKSCC is the shareholder on record of SSE / SZSE listed companies (in its capacity as nominee holder for Hong Kong and overseas investors), it can attend shareholders' meeting as shareholder. Where the articles of association of a listed company do not prohibit the appointment of proxy / multiple proxies by its shareholder, HKSCC will make arrangements to appoint 1 or more investors as its proxies or representatives to attend shareholders' meetings when instructed. Further, investors (with holdings reaching the thresholds required under Mainland regulations and the articles of associations of listed companies) may, through their CCASS Participants, pass on proposed resolutions to listed companies via HKSCC under the CCASS Rules. HKSCC will pass on such resolutions to the companies as shareholder on record if so permitted under the relevant regulations and requirements.
Real-time SSE 1-depth data of the eligible stocks for Northbound trading is currently disseminated to EPs via their CC OG, updated once every 5 seconds whilst real-time SZSE 1-depth data of the eligible stocks for Northbound trading will be disseminated to EPs via their CC OG, updated once every 3 seconds. Data content from both SSE and SZSE is the same and it includes Best Bid Price / Volume, Best Offer Price / Volume, Volume Traded, Value Traded, Previous Price, Open Price, Latest Price, Highest Price and Lowest Price.
To increase market transparency, real-time daily quote balance for Northbound trading will be disseminated to CCEPs via their CC OG and OMD Index Feed and the information will be updated once every 5 seconds. The information can be redistributed free of charge.
For Northbound trading under Shanghai Connect, CCEPs, system vendors and Hong Kong and overseas investors may source real-time market data of SSE via SSE licensed information vendors, a list of which is available on the website of China Investment Information Services Limited, which is a wholly-owned subsidiary of SSE incorporated in Hong Kong and is responsible for SSE's overseas market data business. SSE real-time market data can also be accessed through the licensed Mainland vendors of SSE Infonet Ltd which is the information business arm of SSE.
For Northbound trading under Shenzhen Connect, CCEPs, system vendors and Hong Kong and overseas investors may also source real-time market data of SZSE via SZSE licensed information vendors, a list of which is available on the website of Shenzhen Securities Information Co. Ltd., which is a majority own-subsidiary of SZSE incorporated in China and is SZSE's exclusive agent that is responsible for SZSE's local and overseas market data businesses.
Similarly, Mainland investors may also source market data of SEHK via HKEx licensed information vendors who are providing data services in the Mainland. There are also 24 information vendors providing real-time basic market prices (BMP) to investors in Hong Kong, the Mainland and overseas for free. The list of such vendors and their websites is available on HKEx website.
In addition to the CCASS online functions and reports, CCASS Participants can also refer to the websites of SSE and SZSE and officially appointed newspapers and website (i.e. Shanghai Securities News「上海證券報」, Securities Times「證券時報」, China Securities Journal「中國證券報」and Securities Daily「證券日報」and www.cninfo.com.cn「巨潮資訊網」) for the corporate announcements made by SSE- or SZSE-listed companies. CCASS Participants are reminded that Issuers listed on the ChiNext Market are required to publish certain corporate announcements on their corporate websites and the officially appointed websites only. Corporate announcements posted through these channels are only available in Simplified Chinese.
Hong Kong and overseas investors can also visit HKEx website's China Stock Markets Web for the company announcements of SSE Securities issued on the previous trading day.